Bank of Canada Governor Stephen Poloz urged the country’s policy makers to press ahead with efforts to remove trade restrictions and spend more on infrastructure in order to boost sluggish long-term growth rates. Poloz, speaking in Quebec City, said an aging population and other factors such as rising global savings rates and lower business investment have pushed down the country’s “potential” growth rate to about 1.5 percent. According to Poloz, that means savers and companies will need to learn to adapt to an era of lower returns on their investments, with businesses needing to reduce their expectations on how much they can earn from investments. It also means that need for growth-enhancing measures has become even more important. “In a lower-for-longer world, these are opportunities we simply cannot afford to miss,” Poloz said, according to a prepared transcript of the text provided to reporters. “Policy-makers need to make sure they are working to increase the economy’s potential output and reduce uncertainty—whether economic, political or regulatory—that may be holding back investment.” The speech today is in line with recent communications by the Bank of Canada that low growth rates are due to fundamental factors and require a broader policy response to counter. “Low interest rates are actually having big effects today, but the headwinds pushing back on that stimulus remain quite powerful,” Poloz said. Still, “the decline in the real neutral rate means that any given setting of our policy rate will be less stimulative today than it was a decade or two ago.” Low growth is a situation unlikely to change any time soon even with the central bank providing stimulus to the economy with low interest rates, said Poloz. The country will continue to be in an era of low rates even after stimulus is eventually withdrawn, he said. “It is quite evident that our economy is still facing strong headwinds, and we need stimulative monetary policy to counteract them and move us closer to full capacity,” Poloz said. Still, the economy is still in a period when monetary policy needs to be stimulative, he said. The Bank of Canada estimates Canada’s neutral nominal interest rate—the borrowing cost that is neither stimulative or contractionary and when the economy is operating at full capacity—is between 2.75 percent to 3.75 percent. That’s down from a range of 4.5 percent to 5.5 percent before the crisis. In his speech Poloz estimated the potential benefits of a number of reforms. The removal of interprovincial trade barriers could add as much as 0.2 percentage points to growth, while the Trans-Pacific Partnership trade deal could add about the same amount. Fulfilling trade deals and pressing ahead with infrastructure spending could drive up GDP by as much as 5 percent by 2025, or as much as C$100 billion in income each year, Poloz said.